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Fixed gas price hands next city board choices

[05/25/01] When a new city administration takes office in July, how to contend with a $1.8 million difference between revenue and the cost of natural gas will be on its agenda.

The choices are to raise rates for the city-owned utility, pay a supplement from the general fund or a combination of both.

Under a deal announced May 10 by Vicksburg officials, the price the city pays for gas will remain constant at $4.55 per 1,000 cubic feet for the next 12 months.

While that amount is less than what the city pays for gas today, the amount paid by customers still will not match the cost.

“I’d like to see gaming funds be used to underwrite some of the cost,” said Mayor Robert Walker.

At the rate of $4.55 per unit of natural gas, plus the 70 cents per unit for delivery and storage and $3.60 per unit for overhead, the total cost for the city per 1,000 cubic feet of gas is about $8.85. The average cost to customers is $7 per unit, according to estimates from city officials.

At that rate, the estimated difference between what the city will bill customers at current rates and the total cost to the city will be $1.8 million for the fiscal year beginning Oct. 1, 2001.

Since August 1993, the city’s general budget has risen from about $12 million per year to about $33 million. Four casinos contribute about $7.5 million per year in revenue-based state and local taxes, property taxes and other fees.

The budget process will begin shortly after the inauguration of the new city administration with budget hearings in September. Walker is seeking re-election on June 5 as is North Ward Alderman Gertrude Young. The South Ward is guaranteed a new representative because incumbent Sam Habeeb is not seeking re-election.

“My primary goal is to relieve as much of the burden on consumers as possible,” Walker said.

During the past winter when prices to the city were as much as $9.69 per 1,000 cubic feet and users of natural gas across the country had bills double and triple, city officials here used $2.7 million in cash reserves to avoid a rate increase in Vicksburg. The administration’s decision to build the reserve shielded Vicksburg customers from surging bills but it has been depleted.

In 1999, the Vicksburg Board of Mayor and Aldermen voted 2-1 to raise the rates charged to city residents for water, sewer and garbage collection to balance those funds. The city had been supplementing the water and sewer fund with $1.4 million from the general fund, but opted to make bills for those utilities more closely match the city’s actual costs. Even though the new rates saved the general fund $1.4 million, there was no tax relief and that money went to other purposes.

Walker said it was too soon to say if the city would raise gas rates.

“I’d like to look at the budget and see what we’re doing for the next fiscal year first,” he said.

Walker said there are adequate cash reserves to continue to supplement the gas fund, but said the city is working on an ordinance that would adjust the rate customers pay for natural gas based on the cost to the city.

Electric companies such as Entergy already have a similar billing system. Monthly statements indicate a fuel adjustment to the total bill that reflects the cost to generate the power.

“Our customers are going to get the best possible treatment,” Walker said.

The contract, which Walker called a “calculated risk,” locks in the cost the city pays for gas starting June 1. If the cost should go down, the city will still have to pay $4.55 per unit, but predictions for this summer and rest of the year is $6 or $7 per 1,000 cubic feet.

Walker, 57, faces independent candidates Eva Marie Ford, 63; Laurence Leyens, 37, and Joe Loviza, 61. Young, 45, faces independent Sylvester Walker, 40.